Bega and Yili look to mop up Murray Goulburn’s Koroit milk processing facility as ACCC flags Saputo issue

Murray Goulburn has announced it will attempt to sell to Canadian Milk company Suputo. There are questions over what will happen to the Koroit processing plant, given Suputo already owns Warrnambool cheese and butter (Picture: ANDY ROGERS)

Chinese powerhouse Yili and Bega Cheese are believed to have already submitted offers to Saputo to buy Murray Goulburn’s Koroit milk processing facility.

As anticipated, the Australian Competition and Consumer Commission has raised concerns about Saputo’s ownership of Murray Goulburn’s Koroit plant in western Victoria on the back of its planned $1.3 billion acquisition of the struggling dairy co-operative.

As reported by The Australian this morning, the takeover of Murray Goulburn (MGC) would see Canada’s Saputo become Australia’s dominant dairy entity.

The ACCC said Saputo’s Allansford plant and Murray Goulburn’s Koroit plant would have over two thirds of raw milk processing capacity in southwest Victoria and southeast South Australia.

The two plants currently acquire the majority of raw milk from dairy farmers in the area.

The Koroit plant accounts for about one third of Murray Goulburn’s overall milk capacity and market analysts estimate its value at about a quarter of the overall business, suggesting it may sell for around $325m.

Both Yili, advised by Bank of America Merrill Lynch, and Bega, advised by Kidder Williams, entered the Deutsche Bank-run competition to buy Murray Goulburn last year, with both parties beaten in the contest by the Moelis-advised Saputo, the owner of Warrnambool Cheese and Butter.

Its acquisition of WCB four years ago made it the third-largest dairy processor in Australia.

A second sales process was predicted to swing into action for the Murray Goulburn’s Koroit facility, as foreshadowed by The Australian’s DataRoom around November last year, to appease the ACCC

Last year, Murray Goulburn said it was outlaying $260 million to make infant formula at Koroit in Victoria after reaching supply agreements with Mead Johnson Nutrition and Kalbe Nutritionals from Indonesia.

The deal — overseen by the group’s former managing director Gary Helou — would enable Murray Goulburn to capitalise on Indonesia’s large infant population with the distribution of its Devondale Natra Start infant formula product.

Parmalat and Goodman Fielder may also be eager buyers of the Koroit asset.